Mobile communications – Nokia cuts 10,000 jobs to compete for 5G networks

Eight months after taking office, Nokia boss Pekka Lundmark is nailing it: after a new organizational structure for the Finnish network equipment supplier, he plans to cut up to 10,000 of the roughly 90,000 jobs in the next two years. The goal is to have enough money to invest in research and development in the race for the top position in 5G technology, Lundmark justified the deforestation on Tuesday.

For the restructuring, he wants to take 600 to 700 million euros in hand. This is offset by savings of 600 million euros by the end of 2023. “Decisions that have a potential impact on our employees are never made lightly,” said Lundmark. But Nokia is striving for technology leadership in its four divisions. Therefore, the group must invest in product quality and competitiveness. That makes cost reductions inevitable.

It’s not the first time Nokia has cut jobs. After taking over French rival Alcatel-Lucent five years ago, the former rubber boot manufacturer and mobile phone pioneer had cut thousands of jobs.

According to a Nokia spokesman, most countries around the world are now likely to be affected by the downsizing; with the exception of France, where more than 1,000 jobs were lost last year. According to another spokesman, around 360 of the total of 2,900 employees are affected in Germany. There should be no site closings.

The savings program does not bring any savings

“The austerity program is bigger than expected, but what is interesting is that it does not lead to lower spending,” commented Nordea analyst Sami Sarkamies. “The company is shifting the focus from general costs to research and development, which should lead to future growth and better margins.”

Telecommunications companies around the world are pushing ahead with the development of networks for the new 5G mobile communications standard, which lays the foundation for technologies such as virtual reality and autonomous driving as well as for campus networks for Industry 4.0. Nokia had warned in early February of a challenging year with headwinds due to market share losses and falling prices. Most recently, the Swedish competitor Ericsson in particular benefited from the problems of the Chinese market leader Huawei and outperformed Nokia in important 5G orders – especially in China.

Lundmark, who had taken over the helm at Nokia in the summer, gave the group a new organizational structure and, in this context, also downsized the management team. The Finns are also saying goodbye to their holistic approach and forming four business units for the first time. (apa)